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Aetna Reports Fourth-Quarter and Full-Year 2012 Results



  Aetna Reports Fourth-Quarter and Full-Year 2012 Results

  * Fourth-quarter 2012 operating earnings per share ^(1) were $.94
  * Full-year 2012 operating earnings per share ^(1) were $5.13
  * Net income per share was $.56 for the fourth quarter 2012 and $4.81 for
    the full year
  * Total medical benefit ratio was 84.1 percent in the fourth quarter 2012
    and 82.2 percent for the full year
  * Revenue ^(2) increased 5 percent for the fourth quarter of 2012 and 6
    percent for full-year 2012 over the corresponding periods of 2011
  * Medical membership increased in the fourth quarter of 2012 and totaled
    18.2 million members at December 31, 2012
  * Aetna reaffirms full-year 2013 projected operating earnings per share of
    at least $5.40 ^(3)

Business Wire

HARTFORD, Conn. -- January 31, 2013

Aetna (NYSE: AET) today announced fourth-quarter 2012 operating earnings ^(1)
of $317.0 million, or $.94 per share. Full-year 2012 operating earnings ^(1)
were $1.77 billion, or $5.13 per share. Net income for the fourth quarter of
2012 was $190.1 million, or $.56 per share, and includes $.44 per share of
charges for other items, primarily a litigation-related settlement, offset by
$.06 per share of net realized capital gains. Full-year net income was $1.66
billion, or $4.81 per share.

Fourth-Quarter Financial Results at a Glance
                                                                       
(Millions, except per share results)        2012           2011         Change
Revenue ^ (2)                             $ 8,955.0      $ 8,544.1      5   %
Operating earnings ^(1)                     317.0          354.3        (11 )%
Net income                                  190.1          372.6        (49 )%
                                                                         
Per share results:
Operating earnings ^(1)                   $ .94          $ .97          (3  )%
Net income                                  .56            1.02         (45 )%
                                                                         
Weighted average common shares -            338.5          365.8         
diluted
                                                                         
                                                                         
Full-Year Financial Results at a Glance
                                                                         
(Millions, except per share results)        2012           2011         Change
Revenue ^ (2)                             $ 35,544.8     $ 33,611.9     6   %
Operating earnings ^(1)                     1,769.6        1,965.7      (10 )%
Net income                                  1,657.9        1,985.7      (17 )%
                                                                         
Per share results:
Operating earnings ^(1)                   $ 5.13         $ 5.17         (1  )%
Net income                                  4.81           5.22         (8  )%
                                                                         
Weighted average common shares -            345.0          380.2         
diluted
                                                                         

“Aetna's solid fourth-quarter performance caps off an important year for the
company. In 2012 we demonstrated the power of our diversified portfolio,
advanced our mission to transform the health care marketplace and agreed to
acquire Coventry Health Care, which will greatly enhance our long-term
strategy,” said Mark T. Bertolini, Aetna chairman, CEO and president. “We are
positioned well for 2013, with new commercial contract wins and a successful
Medicare selling season across our entire portfolio of Medicare products.

“Our Accountable Care Solutions business is making great progress on our
strategy to transform the health care system, with five new accountable care
agreements in the fourth quarter alone. Our relationships with leading health
care providers now share a common set of goals -- to improve both the quality
of care and patient experience, and to reduce costs. This new health care
model drives additional membership growth, and will help to improve the
quality and affordability of health care as we insure more Americans,” said
Bertolini.

“Aetna's 2012 results demonstrate our focus on operational and financial
execution across all aspects of our business,” said Joseph M. Zubretsky, Aetna
senior executive vice president and CFO. “We ended the year with strong growth
in membership to more than 18.2 million medical members, increased revenues by
approximately 6 percent over 2011 and reduced our business segment operating
expense ratio. We continued to focus on capital management, raising our
quarterly dividend by more than 14 percent and repurchasing $1.4 billion of
Aetna's shares.

“We believe our core business, supplemented by emerging businesses growth and
effective capital deployment, will enable us to generate low double-digit
operating earnings per share growth on average over time. Our expected
completion of the Coventry Health Care acquisition this year will build upon
our success and enhance our capabilities,” said Zubretsky.

Total company results

  * Revenues ^ (2) for the fourth quarter of 2012 were $8.96 billion compared
    with $8.54 billion for the fourth quarter of 2011. For full-year 2012,
    revenues ^(2) were $35.54 billion compared with $33.61 billion for 2011.
    The increase in each period is primarily the result of higher Health Care
    premiums in each of our Commercial, Medicare and Medicaid businesses.
    Total Revenue was $9.93 billion and $8.57 billion for the fourth quarters
    of 2012 and 2011, respectively, and $36.60 billion and $33.78 billion for
    the full years 2012 and 2011, respectively. Total Revenue for the fourth
    quarter and full year 2012 includes $941.4 million of one-time Large Case
    Pensions premium.
  * Operating Expenses ^(1)  were $1.76 billion for the fourth quarter of
    2012. The business segment operating expense ratio ^(4) was 19.7 percent
    and 21.4 percent for the fourth quarters of 2012 and 2011, respectively.
    For full-year 2012, the business segment operating expense ratio ^(4)
    decreased to 18.9 percent from 19.8 percent in 2011. The decrease in the
    business segment operating expense ratio in each period is primarily from
    improved operating leverage and continued execution of our expense
    initiatives. Total operating expense ratio was 19.4 percent and 21.4
    percent for the fourth quarters of 2012 and 2011, respectively, and 18.8
    percent and 20.1 percent for the full years 2012 and 2011, respectively.
    The decrease in the total operating expense ratio in both 2012 periods is
    primarily due to the one-time Large Case Pensions premium.
  * Pre-tax Operating Margin ^(5) was 6.5 percent for the fourth quarter of
    2012 compared with 7.9 percent for the fourth quarter of 2011. For
    full-year 2012, the pre-tax operating margin ^(5) was 8.7 percent compared
    to 10.2 percent for 2011. For the fourth quarter of 2012, the after-tax
    net income margin was 1.9 percent compared to 4.3 percent for 2011. The
    after-tax net income margin for full-year 2012 was 4.5 percent compared to
    5.9 percent for 2011.
  * Share Repurchases totaled 11.0 million shares at a cost of $493.0 million
    in the fourth quarter of 2012, bringing full-year total repurchases to
    32.3 million shares, at a cost of $1.4 billion.

Health Care business results

Health Care, which provides a full range of insured and self-insured medical,
pharmacy, dental and behavioral health products and services, reported:

  * Operating earnings ^(1) of $307.9 million for the fourth quarter of 2012
    compared with $361.8 million for the fourth quarter of 2011. Favorable
    before-tax development of prior-period health care cost estimates in the
    fourth quarters of 2012 and 2011 was approximately $81 million ($52
    million after-tax) and $98 million ($63 million after-tax), respectively,
    primarily from incurred health care costs from the third quarter of 2012
    and third quarter of 2011, respectively. Operating earnings decreased in
    the fourth quarter of 2012 primarily due to lower underwriting margins in
    our Commercial business.
  * Net income was $217.0 million for the fourth quarter of 2012 compared with
    $374.7 million for the fourth quarter of 2011.
  * Revenues ^ (2) of $8.29 billion for the fourth quarter of 2012 compared
    with $7.95 billion for the fourth quarter of 2011. The increase is due
    primarily to higher Commercial premium primarily from higher premium
    rates, higher Medicare premium from Medicare Advantage membership growth
    and higher Medicaid premium primarily from in-state expansions, partially
    offset by lower Commercial Insured membership in 2012. Total Revenue for
    the fourth quarter of 2012, which includes net realized capital gains, was
    $8.31 billion compared with $7.97 billion for the fourth quarter of 2011.
  * Sequentially, fourth-quarter 2012 medical membership increased by 64,000
    to 18.242 million, led by growth in Commercial ASC and Medicare Supplement
    members; dental membership increased by 7,000 to 13.615 million and
    pharmacy benefit management services membership decreased by 24,000 to
    8.791 million.
  * Medical benefit ratios (MBRs) for the fourth quarters of 2012 and 2011
    were as follows:

                                                   2012           2011  
Commercial                                         83.4 %         79.0 %
Medicare                                           85.6 %         84.8 %
Medicaid                                           87.3 %         88.9 %
Total ^(a)                                         84.1 %         80.7 %

(a) Total MBR includes favorable before-tax prior-period reserve development
of $81 million and $98 million for the fourth quarters of 2012 and 2011,
respectively, which occurred in each of our businesses with the majority
related to the Commercial business in each period.

Full-year 2012 operating earnings for Health Care were $1.75 billion, compared
with $1.96 billion in 2011. The decrease in operating earnings was largely the
result of lower underwriting margins in our Commercial business, which were
partially offset by the favorable impact of higher underwriting margins in our
Medicare business, in part the result of our 2011 acquisition of Genworth's
Medicare Supplement business. Our underwriting margin in 2011 included
approximately $207 million before-tax of favorable prior-years reserve
development. There was no significant prior-years reserve development in 2012.
Full-year 2012 net income was $1.69 billion, compared to $1.95 billion in
2011.

Group Insurance business results

Group Insurance, which includes group life, disability and long-term care
products, reported:

  * Operating earnings ^(1) of $45.3 million for the fourth quarter of 2012
    compared with $27.8 million for the fourth quarter of 2011, reflecting
    higher revenues ^(2) and improved operating expense leverage.
  * Net income of $49.6 million for the fourth quarter of 2012 compared with
    $36.3 million for the fourth quarter of 2011.
  * Revenues ^ (2) of $534.7 million for the fourth quarter of 2012 compared
    with $488.3 million for the fourth quarter of 2011. Total Revenue, which
    includes net realized capital gains, was $541.3 million in the fourth
    quarter of 2012 and $501.5 million in the fourth quarter of 2011.

Full-year 2012 operating earnings ^(1) for Group Insurance were $161.5
million, compared with $153.0 million in 2011. Full-year 2012 net income was
$176.3 million, compared to $181.8 million in 2011.

Large Case Pensions business results

Large Case Pensions, which manages a variety of discontinued and other
retirement and savings products, primarily for qualified pension plans,
reported:

  * Operating earnings of $4.4 million for the fourth quarter of 2012 compared
    with $4.3 million for the fourth quarter of 2011.
  * Net income of $5.1 million for the fourth quarter of 2012 compared with
    $1.2 million for the fourth quarter of 2011.
  * Revenues ^ (2) of $131.0 million for the fourth quarter of 2012 compared
    with $104.4 million for the fourth quarter of 2011. Total Revenue, which
    includes net realized capital gains, was $1.1 billion in the fourth
    quarter of 2012 compared with $99.5 million in the fourth quarter of 2011.
    Fourth-quarter 2012 Total Revenue also includes $941.4 million of one-time
    group annuity conversion premium related to the conversion of an existing
    Large Case Pensions group annuity contract from a participating to a
    non-participating contract. That revenue is offset by an equivalent
    one-time benefit expense associated with that contract conversion.

Full-year 2012 operating earnings ^(1) for Large Case Pensions were $17.8
million, compared with $20.7 million for 2011. The decrease is consistent with
the run-off nature of this segment. Full-year net income was $17.4 million,
compared to $21.8 million for 2011. Full year 2012 revenues ^ (2) were $503.6
million compared with $498.6 million for 2011. Full-year 2012 Total Revenue,
which includes group annuity contract conversion premium on an existing
contract and net realized capital losses, was $1.4 billion compared to $500.2
million for 2011.

Aetna's conference call to discuss fourth-quarter 2012 results will begin at
8:30 a.m. ET today. The public may access the conference call through a live
audio webcast available on Aetna's Investor Information link on the Internet
at www.aetna.com. Financial, statistical and other information, including GAAP
reconciliations, related to the conference call also will be available on
Aetna's Investor Information website.

The conference call also can be accessed by dialing 1-888-516-2447 or
+1-719-325-2140 for international callers. The company suggests participants
dial in approximately 10 minutes before the call. The access code is 6653248.
Individuals who dial in will be asked to identify themselves and their
affiliations.

A replay of the call may be accessed through Aetna's Investor Information link
on the Internet at www.aetna.com or by dialing 1-888-203-1112, or
+1-719-457-0820 for international callers. The replay access code is 6653248.
Telephone replays will be available until 11 p.m. ET on February 7, 2013.

About Aetna

Aetna is one of the nation's leading diversified health care benefits
companies, serving approximately 37.3 million people with information and
resources to help them make better informed decisions about their health care.
Aetna offers a broad range of traditional, voluntary and consumer-directed
health insurance products and related services, including medical, pharmacy,
dental, behavioral health, group life and disability plans, and medical
management capabilities, Medicaid health care management services and health
information technology services. Our customers include employer groups,
individuals, college students, part-time and hourly workers, health plans,
health care providers, governmental units, government-sponsored plans, labor
groups and expatriates. For more information, see www.aetna.com.

Consolidated Statements of Income
                                                                   
                                                                     
                         For the Three Months        For the Year Ended
                         Ended December 31,          Ended December 31,
(Millions)               2012          2011          2012           2011
Revenue:
Health care              $ 7,269.9     $ 6,928.5     $ 28,872.0     $ 27,189.2
premiums
Other premiums             474.8         438.9         1,902.0        1,775.8
Group annuity
contract                   941.4         -             941.4          -
conversion premium
Fees and other             971.8         973.4         3,853.5        3,716.1
revenue
Net investment             239.5         203.3         918.3          930.8
income
Net realized               31.1          28.2          108.7          167.9
capital gains
Total revenue              9,928.5       8,572.3       36,595.9       33,779.8
                                                                     
Benefits and
expenses:
Health care costs          6,115.4       5,593.2       23,728.9       21,653.5
Current and future         497.0         442.6         2,008.1        1,876.5
benefits
Benefit expense on
group annuity              941.4         -             941.4          -
contract
conversion
Operating
expenses:
Selling expenses           285.0         277.8         1,105.5        1,104.8
General and
administrative             1,639.4       1,555.1       5,770.9        5,699.6
expenses
Total operating            1,924.4       1,832.9       6,876.4        6,804.4
expenses
Interest expense           76.6          59.6          268.8          246.9
Amortization of
other acquired             33.1          37.1          142.0          120.7
intangible assets
Loss on early
extinguishment of          49.5          -             84.9           -
long-term debt
Total benefits and         9,637.4       7,965.4       34,050.5       30,702.0
expenses
                                                                     
Income before              291.1         606.9         2,545.4        3,077.8
income taxes
Income taxes               101.0         234.3         887.5          1,092.1
Net income               $ 190.1       $ 372.6       $ 1,657.9      $ 1,985.7
                                                                       
                                                                       

Summary of Results
                                                                  
                                                                    
                         For the Three Months      For the Year Ended
                         Ended December 31,        Ended December 31,
(Millions)               2012          2011        2012            2011
Operating earnings       $ 317.0       $ 354.3     $ 1,769.6       $ 1,965.7
Litigation-related
settlement, net of         (78.0 )       -           (78.0   )       -
tax
Transaction and
integration-related        (12.9 )       -           (25.4   )       -
costs, net of tax
Loss on early
extinguishment of          (32.2 )       -           (55.2   )       -
long-term debt, net
of tax
Severance charge,          (24.1 )       -           (24.1   )       -
net of tax
Voluntary early
retirement program,        -             -           -               (89.1   )
net of tax
Net realized capital       20.3          18.3        71.0            109.1    
gains, net of tax
Net income (GAAP         $ 190.1       $ 372.6     $ 1,657.9       $ 1,985.7  
measure)
                                                                    
Weighted average
common shares -            333.6         358.5       340.1           372.5    
basic
                                                                    
Weighted average
common shares -            338.5         365.8       345.0           380.2    
diluted
                                                                    
Per Common Share                                                    
Operating earnings       $ .94         $ .97       $ 5.13          $ 5.17
Litigation-related
settlement, net of         (.23  )       -           (.23    )       -
tax
Transaction and
integration-related        (.04  )       -           (.07    )       -
costs, net of tax
Loss on early
extinguishment of          (.10  )       -           (.16    )       -
long-term debt, net
of tax
Severance charge,          (.07  )       -           (.07    )       -
net of tax
Voluntary early
retirement program,        -             -           -               (.24    )
net of tax
Net realized capital       .06           .05         .21             .29      
gains, net of tax
Net income (GAAP         $ .56         $ 1.02      $ 4.81          $ 5.22     
measure)
                                                                              
                                                                              

Segment Information ^(6)
                                                                        
                        For the Three Months            For the Year Ended
                        Ended December 31,              Ended December 31,
(Millions)              2012            2011            2012             2011
Health Care:
Revenue, excluding
net realized            $ 8,289.3       $ 7,951.4       $ 32,918.0       $ 31,132.1
capital gains
Interest income on
proceeds of               1.0             -               1.0              -
transaction-related
debt
Net realized              23.3            19.9            86.5             121.9     
capital gains
Total revenue (GAAP     $ 8,313.6       $ 7,971.3       $ 33,005.5       $ 31,254.0  
measure)
                                                                          
Commercial Medical
Benefit Ratio:
Premiums                $ 5,298.5       $ 5,144.6       $ 20,944.4       $ 20,263.9  
Health care costs       $ 4,420.8       $ 4,063.4       $ 16,995.7       $ 15,787.9  
(GAAP measure)
                                                                          
Commercial MBR            83.4    %       79.0    %       81.1     %       77.9     %
(GAAP measure)
                                                                          
Medicare Medical
Benefit Ratio:
Premiums                $ 1,519.3       $ 1,384.5       $ 6,250.6        $ 5,485.0   
Health care costs       $ 1,299.8       $ 1,174.6       $ 5,240.7        $ 4,608.0   
(GAAP measure)
                                                                          
Medicare MBR (GAAP        85.6    %       84.8    %       83.8     %       84.0     %
measure)
                                                                          
Medicaid Medical
Benefit Ratio:
Premiums                $ 452.1         $ 399.4         $ 1,677.0        $ 1,440.3   
Health care costs       $ 394.8         $ 355.2         $ 1,492.5        $ 1,257.6   
(GAAP measure)
                                                                          
Medicaid MBR (GAAP        87.3    %       88.9    %       89.0     %       87.3     %
measure)
                                                                          
Total Medical
Benefit Ratio:
Premiums                $ 7,269.9       $ 6,928.5       $ 28,872.0       $ 27,189.2  
Health care costs       $ 6,115.4       $ 5,593.2       $ 23,728.9       $ 21,653.5  
(GAAP measure)
                                                                          
Total MBR (GAAP           84.1    %       80.7    %       82.2     %       79.6     %
measure)
                                                                          
Operating earnings      $ 307.9         $ 361.8         $ 1,752.1        $ 1,955.7
Litigation-related
settlement, net of        (78.0   )       -               (78.0    )       -
tax
Transaction and
integration-related       (4.1    )       -               (14.1    )       -
costs, net of tax
Severance charge,         (24.1   )       -               (24.1    )       -
net of tax
Voluntary early
retirement program,       -               -               -                (89.1    )
net of tax
Net realized
capital gains, net        15.3            12.9            56.6             79.2      
of tax
Net income (GAAP        $ 217.0         $ 374.7         $ 1,692.5        $ 1,945.8   
measure)
                                                                                     
                                                                                     

Segment Information continued ^(6)
                                                                          
                          For the Three Months            For the Year Ended
                          Ended December 31,              Ended December 31,
(Millions)                2012            2011            2012             2011
                                                                            
Group Insurance:
Revenue, excluding
net realized              $ 534.7         $ 488.3         $ 2,123.2        $ 1,981.2
capital gains
Net realized                6.6             13.2            22.7             44.4      
capital gains
Total revenue (GAAP       $ 541.3         $ 501.5         $ 2,145.9        $ 2,025.6   
measure)
                                                                            
Operating earnings        $ 45.3          $ 27.8          $ 161.5          $ 153.0
Net realized                4.3             8.5             14.8             28.8      
capital gains
Net income (GAAP          $ 49.6          $ 36.3          $ 176.3          $ 181.8     
measure)
                                                                            
Large Case
Pensions:
Revenue, excluding
net realized
     capital gains        $ 131.0         $ 104.4         $ 503.6          $ 498.6
(losses) and an
other item
Group annuity
contract conversion         941.4           -               941.4            -
premium
Net realized
capital gains               1.2             (4.9    )       (.5      )       1.6       
(losses)
Total revenue (GAAP       $ 1,073.6       $ 99.5          $ 1,444.5        $ 500.2     
measure)
                                                                            
Operating earnings        $ 4.4           $ 4.3           $ 17.8           $ 20.7
Net realized
capital gains               .7              (3.1    )       (.4      )       1.1       
(losses)
Net income (GAAP          $ 5.1           $ 1.2           $ 17.4           $ 21.8      
measure)
                                                                            
                                                                            
Corporate
Financing: ^(7)
Operating loss            $ (40.6   )     $ (39.6   )     $ (161.8   )     $ (163.7   )
Transaction-related         (8.8    )       -               (11.3    )       -
costs, net of tax
Loss on early
extinguishment of           (32.2   )       -               (55.2    )       -         
long-term debt, net
of tax
Net loss (GAAP            $ (81.6   )     $ (39.6   )     $ (228.3   )     $ (163.7   )
measure)
                                                                            
Total Company:
Revenue, excluding
net realized
capital                   $ 8,955.0       $ 8,544.1       $ 35,544.8       $ 33,611.9
     gains and
other items (A)
Group annuity
contract conversion         941.4           -               941.4            -
premium
Interest income on
proceeds of                 1.0             -               1.0              -
transaction-related
debt
Net realized                31.1            28.2            108.7            167.9     
capital gains
Total revenue (GAAP       $ 9,928.5       $ 8,572.3       $ 36,595.9       $ 33,779.8  
measure) (B)
                                                                            
Business segment
operating expenses        $ 1,761.8       $ 1,831.7       $ 6,705.7        $ 6,662.5
(C)
Corporate Financing
segment operating           (.6     )       1.2             (2.5     )       4.9       
(benefit) expense
^(7)
Operating expenses,
including Corporate         1,761.2         1,832.9         6,703.2          6,667.4
Financing segment
Litigation-related          120.0           -               120.0            -
settlement
Transaction and
integration-related         6.2             -               16.2             -
costs
Severance charge            37.0            -               37.0             -
Voluntary early             -               -               -                137.0     
retirement program
Total operating
expenses (GAAP            $ 1,924.4       $ 1,832.9       $ 6,876.4        $ 6,804.4   
measure) (D)
                                                                            
                                                                            
Operating Expenses
Ratios:
Business segment
operating expense           19.7    %       21.4    %       18.9     %       19.8     %
ratio (C)/(A)
Total operating
expense ratio               19.4    %       21.4    %       18.8     %       20.1     %
(D)/(B) (GAAP
measure)
                                                                                       
                                                                                       

Membership
                                                                     
                                   December 31,     September 30,     December
                                                                      31,
(Thousands)                        2012             2012              2011
Medical Membership:
Commercial                         16,299           16,281            16,626
Medicare Advantage                 448              443               398
Medicaid                           1,257            1,253             1,272
Medicare Supplement                238              201               163
Total Medical Membership           18,242           18,178            18,459
                                                                       
Consumer-Directed Health           2,550            2,562             2,387
Plans ^(8)
                                                                       
Dental Membership:
Commercial                         11,950           11,956            12,071
Medicare & Medicaid                696              697               652
Network Access ^(9)                969              955               947
Total Dental Membership            13,615           13,608            13,670
                                                                       
Pharmacy Benefit Management
Membership:
Commercial                         8,002            8,028             8,177
Medicare Prescription Drug         479              479               427
Plan (stand-alone)
Medicare Advantage                 203              201               189
Prescription Drug Plan
Medicaid                           107              107               27
Total Pharmacy Benefit             8,791            8,815             8,820
Management Services
                                                                       
                                                                       

Operating Margins
                                                                          
                          For the Three Months            For the Year Ended
                          Ended December 31,              Ended December 31,
(Millions)                2012            2011            2012             2011
Reconciliation to
Income Before
Income Taxes:
Operating earnings
^(1) before income
taxes, excluding
interest
     expense and          $ 581.4         $ 675.4         $ 3,104.6        $ 3,414.5
amortization of
other acquired
intangible assets
(A)
Interest expense *          (63.0   )       (59.6   )       (251.4   )       (246.9   )
Amortization of
other acquired              (33.1   )       (37.1   )       (142.0   )       (120.7   )
intangible assets
Litigation-related          (120.0  )       -               (120.0   )       -
settlement
Transaction and
integration-related         (18.8   )       -               (32.6    )       -
costs
Loss on early
extinguishment of           (49.5   )       -               (84.9    )       -
long-term debt
Severance charge            (37.0   )       -               (37.0    )       -
Voluntary early             -               -               -                (137.0   )
retirement program
Net realized                31.1            28.2            108.7            167.9     
capital gains
Income before
income taxes (GAAP        $ 291.1         $ 606.9         $ 2,545.4        $ 3,077.8   
measure)
                                                                            
Reconciliation to
Net Income:
Operating
earnings,^(1)
excluding interest
expense and               $ 379.4         $ 417.3         $ 2,025.3        $ 2,204.7
     amortization
of other acquired
intangible assets,
net of tax
Interest expense,           (40.9   )       (38.8   )       (163.4   )       (160.5   )
net of tax *
Amortization of
other acquired              (21.5   )       (24.2   )       (92.3    )       (78.5    )
intangible assets,
net of tax
Litigation-related
settlement, net of          (78.0   )       -               (78.0    )       -
tax
Transaction and
integration-related         (12.9   )       -               (25.4    )       -
costs, net of tax
Loss on early
extinguishment of           (32.2   )       -               (55.2    )       -
long-term debt, net
of tax
Severance charge,           (24.1   )       -               (24.1    )       -
net of tax
Voluntary early
retirement program,         -               -               -                (89.1    )
net of tax
Net realized
capital gains, net          20.3            18.3            71.0             109.1     
of tax
Net income (GAAP          $ 190.1         $ 372.6         $ 1,657.9        $ 1,985.7   
measure) (B)
                                                                            
Reconciliation of
Revenue:
Revenue, excluding
net realized
capital                   $ 8,955.0       $ 8,544.1       $ 35,544.8       $ 33,611.9
     gains and
other items (C)
Group annuity
contract conversion         941.4           -               941.4            -
premium
Interest income on
proceeds of                 1.0             -               1.0              -
transaction-related
debt
Net realized                31.1            28.2            108.7            167.9     
capital gains
Total revenue (GAAP       $ 9,928.5       $ 8,572.3       $ 36,595.9       $ 33,779.8  
measure) (D)
                                                                            
Operating and Net
Income Margins:
Pretax operating            6.5     %       7.9     %       8.7      %       10.2     %
margin (A)/(C)
After-tax net
income margin               1.9     %       4.3     %       4.5      %       5.9      %
(B)/(D) (GAAP
measure)
                                                                                       

* Interest expense of $40.9 million ($63.0 million pretax) and $163.4 million
($251.4 million pretax), for the fourth quarter and year ended December 31,
2012, respectively, exclude costs associated with the bridge credit agreement
executed in connection with the proposed acquisition of Coventry Health Care,
Inc. ("Coventry"). Those costs are presented within transaction and
integration-related costs.

^(1) Operating earnings and operating earnings per share exclude from net
income net realized capital gains and losses and other items, if any, that
neither relate to the ordinary course of our business nor reflect our
underlying business performance. Although the excluded items may recur,
management believes that operating earnings and operating earnings per share
provide a more useful comparison of Aetna's underlying business performance
from period to period. Management uses operating earnings to assess business
performance and to make decisions regarding Aetna's operations and allocation
of resources among Aetna's businesses. Operating earnings is also the measure
reported to the Chief Executive Officer for these purposes.

For the periods covered in this press release, the following items are
excluded from operating earnings because we believe they neither relate to the
ordinary course of our business nor reflect our underlying business
performance:

  * In the fourth quarter of 2012, we recorded a charge of $78.0 million
    ($120.0 million pretax) related to the settlement of purported class
    action litigation regarding Aetna's payment practices related to
    out-of-network health care providers.
  * We incurred transaction and integration-related costs of $12.9 million
    ($18.8 million pretax) and $25.4 million ($32.6 million pretax) during the
    three months and year ended December 31, 2012, respectively, related to
    the proposed acquisition of Coventry. Transaction costs include advisory,
    legal and other professional fees which are not deductible for tax
    purposes and are reflected in the GAAP Consolidated Statements of Income
    in general and administrative expenses. Transaction costs also include the
    cost of a bridge credit agreement that was in place prior to permanent
    financing that was obtained in November 2012 for the proposed Coventry
    acquisition as well as the negative cost of carry associated with such
    permanent financing. The cost of the bridge credit agreement is reflected
    in the GAAP Consolidated Statements of Income in interest expense. The
    components of negative cost of carry associated with the permanent
    financing are reflected in the GAAP Consolidated Statements of Income in
    interest expense, net investment income, and general and administrative
    expenses.
  * We incurred a loss on the early extinguishment of long-term debt of $32.2
    million ($49.5 million pretax) and $55.2 million ($84.9 million pretax)
    during the three months and year ended December 31, 2012, respectively,
    related to repurchases of certain of our outstanding senior notes.
  * In the fourth quarter of 2012, we recorded a severance charge of $24.1
    million ($37.0 million pretax) related to actions taken in 2012 or
    committed to be taken in 2013.
  * In the fourth quarter of 2012, pursuant to a contractual right exercised
    by a contract holder, an existing group annuity contract converted from a
    participating to a non-participating contract. Pursuant to GAAP accounting
    standards, we recorded $941.4 million of one-time group annuity conversion
    premium for this contract and a corresponding $941.4 million of one-time
    benefit expense on group annuity conversion for this contract in the
    fourth quarter of 2012.
  * In July 2011, we announced a voluntary early retirement program. In
    connection with the voluntary early retirement program, we recorded a
    charge of $89.1 million ($137.0 million pretax) during the third quarter
    of 2011.
  * Net realized capital gains and losses arise from various types of
    transactions, primarily in the course of managing a portfolio of assets
    that support the payment of liabilities. However, these transactions do
    not directly relate to the underwriting or servicing of products for
    customers and are not directly related to the core performance of Aetna's
    business operations.

For a reconciliation of these items to financial measures calculated under
U.S. generally accepted accounting principles (“GAAP”), refer to the tables on
pages 9 through 11 and 13 of this press release.

^(2) Revenue excludes net realized capital gains and losses, interest income
on the proceeds of the transaction-related debt, and premium from a group
annuity contract conversion, as noted in ^(1) above. Refer to the tables on
pages 10, 11 and 13 of this press release for a reconciliation of revenue
excluding net realized capital gains and losses and these other items to total
revenue calculated under GAAP.

^(3) All Aetna's projections, including operating earnings per share, exclude
the impact of the proposed Coventry acquisition and sale of Aetna's Missouri
Medicaid business ("Missouri Care"), unless specifically otherwise noted.
Projected operating earnings per share exclude from net income any future net
realized capital gains and losses and other items, if any, that neither relate
to the ordinary course of our business nor reflect our underlying business
performance. Projected operating earnings per share also exclude projected
transaction and integration-related costs related to the proposed Coventry
acquisition. Aetna is not able to project the amount of future net realized
capital gains and losses or any such other items (other than projected
transaction and integration-related costs related to the proposed Coventry
acquisition) and therefore cannot reconcile projected operating earnings per
share to projected net income per share in any period. Projected operating
earnings per share for the full year 2013 reflect approximately 328 million
weighted average diluted shares.

^(4) The business segment operating expense ratio reflects the exclusion of
the Corporate Financing segment from operating expenses and excludes net
realized capital gains and losses and other items, if any. For a
reconciliation of this metric to the comparable GAAP measure refer to page 11
of this press release.

^(5) In order to provide useful information regarding Aetna's profitability on
a basis comparable to others in the industry, without regard to financing
decisions, income taxes or amortization of other acquired intangible assets
(each of which may vary for reasons not directly related to the performance of
the underlying business), Aetna's pretax operating margin is based on
operating earnings excluding interest expense, income taxes and amortization
of other acquired intangible assets. Management also uses pretax operating
margin to assess Aetna's performance, including performance versus
competitors.

^(6) Revenue and operating expense information is presented before income
taxes. Operating earnings is presented net of income taxes.

^(7) Our Corporate Financing segment is not a business segment. It is added to
our business segments to reconcile to our consolidated results. Net loss of
the Corporate Financing segment includes interest expense on our outstanding
debt, the financing components of our pension and other postretirement benefit
plan expenses (benefits), and the loss on the early extinguishment of
long-term debt. As described in ^(1) above, operating earnings of the
Corporate Financing segment exclude other items, if any. During 2012,
Corporate Financing operating earnings exclude the loss on the early
extinguishment of long-term debt and the interest expense components of
transaction-related costs.

^(8) Represents members in consumer-directed health plans included in Aetna's
Commercial medical membership.

^(9) Represents members in products that allow these members access to Aetna's
dental provider network for a nominal fee.

CAUTIONARY STATEMENT; ADDITIONAL INFORMATION -- -- Certain information in this
press release is forward-looking, including our projections as to operating
earnings per share; weighted average diluted shares; the impact of the
proposed Coventry acquisition on our long-term strategy; our operating
earnings per share growth rate; and the impact of the proposed Coventry
acquisition on us. Forward-looking information is based on management's
estimates, assumptions and projections, and is subject to significant
uncertainties and other factors, many of which are beyond Aetna's control.
Important risk factors could cause actual future results and other future
events to differ materially from those currently estimated by management,
including, but not limited to: the implementation of health care reform
legislation; the timing to consummate the proposed acquisition of Coventry and
proposed sale of Missouri Care; the risk that a condition to closing the
proposed acquisition or proposed sale may not be satisfied; the risk that a
regulatory approval for the proposed acquisition of Coventry or proposed sale
of Missouri Care is delayed, is not obtained or is subject to conditions that
are not anticipated; our ability to achieve the synergies and value creation
contemplated by the proposed acquisition; our ability to promptly and
effectively integrate Coventry's businesses; the diversion of management time
on acquisition or sale related issues; and changes in Aetna's future cash
requirements, capital requirements, results of operations, financial condition
and/or cash flows. Health care reform will significantly impact our business
operations and financial results, including our medical benefit ratios.
Components of the legislation will be phased in over the next several years,
and we will be required to dedicate material resources and incur material
expenses during that time to implement health care reform. Many significant
parts of the legislation, including health insurance exchanges, Medicaid
expansion, the scope of "essential benefits," employer penalties and the
implementation of minimum medical loss ratios, require further guidance and
clarification at both the federal level and/or in the form of regulations and
actions by state legislatures to implement the law. In addition, pending
efforts in the U.S. Congress to amend or restrict funding for various aspects
of health care reform, and the possibility of additional litigation
challenging aspects of the law continue to create additional uncertainty about
the ultimate impact of health care reform. As a result, many of the impacts of
health care reform will not be known for the next several years. Other
important risk factors include: adverse and less predictable economic
conditions in the U.S. and abroad (including unanticipated levels of, or
increases in the rate of, unemployment); adverse changes in health care reform
and/or other federal or state government policies or regulations as a result
of health care reform or otherwise (including legislative, judicial or
regulatory measures that would affect our business model, restrict funding for
or amend various aspects of health care reform, limit our ability to price for
the risk we assume and/or reflect reasonable costs or profits in our pricing,
such as mandated minimum medical benefit ratios, eliminate or reduce ERISA
pre-emption of state laws (increasing our potential litigation exposure) or
mandate coverage of certain health benefits); our ability to differentiate our
products and solutions from those offered by our competitors, and demonstrate
that our products lead to access to better quality of care by our members;
unanticipated increases in medical costs (including increased intensity or
medical utilization as a result of flu, increased COBRA participation rates or
otherwise; changes in membership mix to higher cost or lower-premium products
or membership-adverse selection; changes in medical cost estimates due to the
necessary extensive judgment that is used in the medical cost estimation
process, the considerable variability inherent in such estimates, and the
sensitivity of such estimates to changes in medical claims payment patterns
and changes in medical cost trends; increases resulting from unfavorable
changes in contracting or re-contracting with providers, and increased
pharmacy costs); failure to achieve and/or delays in achieving desired rate
increases and/or profitable membership growth due to regulatory review or
other regulatory restrictions, the difficult economy and/or significant
competition, especially in key geographic areas where membership is
concentrated, including successful protests of business awarded to us; adverse
changes in size, product mix or medical cost experience of membership; our
ability to diversify our sources of revenue and earnings; adverse program,
pricing or funding actions by federal or state government payors, including as
a result of sequestration and/or curtailment or elimination of the Centers for
Medicare & Medicaid Services' star rating bonus payments; the ability to
reduce administrative expenses while maintaining targeted levels of service
and operating performance; the ability to successfully implement our agreement
with CVS Caremark Corporation on a timely basis and in a cost-efficient manner
and to achieve projected operating efficiencies for the agreement; our ability
to integrate, simplify, and enhance our existing information technology
systems and platforms to keep pace with changing customer and regulatory
needs; the success of our health information technology initiatives; our
ability to successfully integrate our businesses (including Medicity, Prodigy
Health Group, PayFlex, and Genworth Financial Inc.'s Medicare Supplement
business and other businesses we may acquire in the future, including
Coventry) and implement multiple strategic and operational initiatives
simultaneously; managing executive succession and key talent retention,
recruitment and development; the outcome of various litigation and regulatory
matters, including guaranty fund assessments and litigation concerning, and
ongoing reviews by various regulatory authorities of, certain of our payment
practices with respect to out-of-network providers and/or life insurance
policies; reputational issues arising from our social media activities, data
security breaches, other cybersecurity risks or other causes; the ability to
develop and maintain relations with providers while taking actions to reduce
medical costs and/or expand the services we offer; our ability to maintain our
relationships with third party brokers, consultants and agents who sell our
products; increases in medical costs or Group Insurance claims resulting from
any epidemics, acts of terrorism or other extreme events; and a downgrade in
our financial ratings. For more discussion of important risk factors that may
materially affect Aetna, please see the risk factors contained in Aetna's 2011
Annual Report on Form 10-K ("Aetna's 2011 Annual Report"), Aetna's Quarterly
Reports on Form 10-Q for the quarters ended March 31, 2012, June 30, 2012 and
September 30, 2012 (together Aetna's "Quarterly Reports"), each on file with
the Securities and Exchange Commission (the “SEC”). You also should read
Aetna's 2011 Annual Report and Aetna's Quarterly Reports on file with the SEC
and Aetna's 2012 Annual Report on Form 10-K when filed with the SEC for a
discussion of Aetna's historical results of operations and financial
condition.

Contact:

Aetna
Investor Contact:
Tom Cowhey, 860-273-2402
cowheyt@aetna.com
or
Media Contact:
Cynthia Michener, 860-273-8553
michenerc@aetna.com
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